PM Abe’s economic policy neglects small businesses

July 6, 2016

Many small- and medium-sized enterprises have difficulty obtaining needed financing. The Abe government has forcibly ended programs supporting financing for small companies while implementing monetary relaxation policies for large corporations.

A survey conducted in March 2016 by the research institute of the All-Japan Commerce and Industry Organization Association (Zenshoren) shows that 46.2% of the small business owners surveyed said that they have little prospects of obtaining needed financing.

In March 2013, the Abe administration abolished the SME Finance Facilitation Act. The act had required financial institutions to respond to small companies’ requests for renegotiating lending terms.

The total amount of loans which private banks offered to small- and medium-sized businesses dropped from 292.7 trillion yen in March 2001 to 221.1 trillion yen in December 2012 when Prime Minister Abe Shinzo returned to power. The Abe government has since promoted unprecedented easy-money policies, insisting that they would help the Japanese economy recover from the prolonged recession. Nevertheless, bank loans to SMEs remain at a low level.

The amount of loans given to SMEs by Japan’s three megabanks – the Bank of Tokyo-Mitsubishi UFJ, Mizuho Bank, and Sumitomo Mitsui Banking Corporation – accounted for 59.6% of the total lending in March 2016, hitting an all-time low.

Government-managed financial institutions, a lifeline to small businesses, have been tightening credit standards to supposedly reach “higher efficiency”.

In terms of numbers, SMEs make up 99% of all companies in the country and workers at SMEs account for 70% of the entire working population. The Japanese Communist Party calls for the enactment of a law to bolster financial services for local small businesses.